Get Uncle Sam To Pay $36,000 For Your Child's Education!
By Brian Gray
Let’s assume that you would like to begin saving for your children’s education fund. At the end of each year, for the next 8 years, you will contribute $2,000 into a Coverdell Education Savings Account (Education IRA), using your after-tax dollars. The money grows tax-free, and neither the contribution nor the interest is taxed when you make a withdrawal, as long as you use it for education purposes.
By the end of 17 years, your Education IRA will have accumulated to just over $86,000. Contrast this with your fully taxable non-IRA account which would have grown to only $50,000. That is a $36,000 difference!
Today, the average 4-year cost of education at a public college in the country is around $38,000. In 18 years it is projected to be close to $86,000. Costs for private education are even higher.
This example illustrates that, by funding your child's education using an Education IRA earning 14% with after-tax contributions of $2,000 in each of the first 8 years of your child's life, you can put an extra $36,000 into your child's future rather than Uncle Sam's pocket!
There would be enough in the IRA account to pay for the entire projected 4-year education costs.
Now, when your child begins their college education, as you draw from the account each year to pay for expenses, and re-invest the remaining funds, at the end of your child's 4th year of college, an extra $27,000 would remain in the IRA that can be transferred to another child's account.
If you have a fully taxable Non-IRA account, you'd have to come out of pocket in your child's 3rd year of college because the account didn't have enough to cover the entire education cost.
By using a Tax-Free Education IRA account, this allows the contributions to accumulate at a much fast rate than the fully taxable investment vehicle.
Brian Gray is a full time real estate investor and web developer. You can visit his website to learn how to Earn 14% Per Year in your IRA. It is a very safe investment.
Article Source: http://EzineArticles.com/
